birth rates and rates of population growth.) Total savings, including those invested in human capital through education and better nutrition and child care, though still low in absolute terms because of low per capita incomes, are considerably higher than monetary savings or investments in physical capital and may be rising more rapidly than per capita incomes.
Limitations on Expenditures for Education and Development
Allocating expenditures for education presents difficulties on the government, as well as the family, level. In low income countries public investments in education reduce the amount that can be spent by governments on capital investments for short-term increases in production. The proportion of the gross national product (GNP) that can be drained off in taxes by all levels of government is limited by the necessities of human survival. In India, for example, 60 to 90 percent of personal incomes must be used to meet the physiological needs of the people for calories, protein and other nutrients, clothing, and shelter. Governments also face other difficulties in raising sufficient direct and indirect taxes to provide the revenue that must be shared among education, health and welfare services, and capital expenditures for development. These difficulties arise from the low levels of exports and imports available for customs revenue and the frequently deteriorating terms of trade, the prevalence of family morality rather than public morality, and the lack of effective political and economic controls.
The situation of average households in low income countries is similar to that of governments. There are difficulties even when per capita incomes rise. The ratio of total savings to income cannot be increased very rapidly as per capita incomes grow, even if strong incentives exist, simply because the necessities of life require that a high proportion of income be used for food, clothing, and shelter. Increasing numbers of children in the average family keep this proportion high even when total family income rises. In economic terms, the "elasticity" of savings to rising incomes tends to be close to one. This means that consumption needs are not adequately met by present income and the bulk of any increase in per capita income will be used for increasing consumption rather than savings.
Educational Costs per Child in Developed and Less Developed Countries
On the average the developed countries with their high per capita incomes are able to spend both a greater percentage of national income and far greater amounts of money on public education than the poor countries. This contrast is widened by the large proportion of children in the developing countries, a result of high birth rates and low death rates. Therefore, even if the level of educational expenditure were the same, expenditures per child would be